Short-Sale / Negative Equity

[Shawady]

Just read about this type of practice that is commen in USA, where the bank writes off some of the loan if a homeowner is in negative equity.
Does anyone think this practice could be adopted in Ireland?

http://www.irishexaminer.com/business/negative-equity-solution-proposed-95958.html

 

[callybags]

He said if a property is valued at €200,000 and the outstanding mortgage is €240,000 then this homeowner is facing negative equity of €40,000.

​

Mr Conway said assuming the customer is in good standing with their bank, many banks will write off the €40,000. ​

He said the benefit to the bank is that it does not have to issue foreclosure proceedings, leaving the mortgage holder free to sell the property.
​

I don't understand. If the customer was "in good standing" with their bank, why would the bank have to issue foreclosure proceedings.

It seems a ridiculous idea​

to suggest a bank write off part of a debt that was freely entered into and is being repaid as agreed between the two parties.​

 

[foxylady]

It seems a ridiculous idea to suggest a bank write off part of a debt that was freely entered into and is being repaid as agreed between the two parties.​

[/quote]


And yet they write off debts for greedy developers !!!

 

[callybags]

I don't think any debts have been written off so far.

 

[demoivre]

Nationwide Building Society in the UK are also introducing a way for people with negative equity to move house.

 

[TheBlock]

I'm in negative equity. If the banks were to intoduce this would I

A)Have to stop paying my mortgage.
B)Have to sell

In order to avail of this write off or if I wanted to stay where I was could I just apply for a write off?

Seems a pretty difficult scheme to introduce.

 

[Kine]

Ouch, the interest rates on the Nationwide offer are high (by today's standards). Interesting idea, but it seems only pretty desperate people will use it.